Devon Energy Corp. is moving forward with plans to form a publicly traded master limited partnership that will own a minority stake in its U.S. midstream business, the company announced Thursday.
Devon's board of directors has signed off on the plan, so the company expects to file a registration statement with the U.S. Securities and Exchange Commission in the third quarter. An initial public offering will follow subject to market conditions.
Devon CEO John Richels raised the possibility of such a move during the company's fourth-quarter earnings call in February.
“If we have assets that we do not believe are being appropriately reflected in our stock price, we're working to determine how that value might be realized or more appropriately reflected in our stock,” Richels told analysts during the call. “However, anything we do must be thoughtful and smart and must enhance long-term value.
“We will not pursue a short-lived bump in the stock price at the expense of sustained value creation.”
Thursday's announcement did not do much for Devon's stock price, which dropped 81 cents to $55.83 a share.
Devon said Thursday it will own the majority of common units in the new midstream partnership. The company expects to use proceeds from the offering to fund its continuing operations.
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